"Chinese stainless steel is cheap not because of labor, but because of the ingredients."
Many buyers ask: "LME Nickel prices are skyrocketing, but why is Chinese 304 price stable?"
The answer is simple: They don't use LME Nickel. They use NPI (Nickel Pig Iron).
This is the single biggest Cost Disruption in the history of the stainless steel industry.
1. The Two Faces of Nickel: Class 1 vs. Class 2
To understand the price, you must know the grade.
- Class 1 Nickel (Pure 99.8%): This is the "LME Nickel." Extracted from sulfide ore. It is expensive and complex to refine. Used for EV Batteries and Aerospace.
- Class 2 Nickel (NPI / Ferro-nickel): Extracted from laterite ore (red dirt). Low purity (10~15% Ni) but contains Iron. This is the main ingredient for Stainless Steel.
- The Revolution: Tsingshan realized they didn't need Class 1 Nickel to make steel. They just needed the "Red Dirt."
2. The Magic of RKEF: Turning Dirt into Steel
In the past, laterite ore was considered "useless dirt" due to low nickel content. Tsingshan changed the game with the RKEF (Rotary Kiln Electric Furnace) process.
📉 The Cost Logic
- Process: Instead of refining pure nickel and mixing it with iron, they smelt the ore directly.
- Benefit: The ore naturally contains Iron. So, they get "Free Iron" along with the Nickel.
- Result: Production cost is 30~40% lower than the traditional method using LME Nickel.
3. The Great Decoupling
This creates a phenomenon called "Price Decoupling."
| LME Nickel Index | Physical Stainless Price |
| Driven by Speculation & Battery Demand. High Volatility. | Driven by NPI Supply & Coal Prices. Relatively Stable. |
Trader's Insight: Do not trust the LME screen blindly. Even if LME rises, if NPI stock is high, stainless prices will drop.
4. The Dark Side: "Dirty Metal"
There is no free lunch. NPI is cheap, but environmentally expensive.
The RKEF process consumes massive amounts of electricity, mostly powered by coal.
- Carbon Footprint: NPI-based steel emits 4~6 times more CO2 than scrap-based EAF steel.
- The Future Risk: Cheap NPI is the target of CBAM (Carbon Border Tax). When the carbon tax is added, the cost advantage may vanish.
Expert Verdict: Dual Sourcing Strategy
The smart buyer splits their portfolio:
- For Cost (Asia/Domestic): Buy NPI-based materials (China/Indonesia) to secure the lowest price.
- For Export (EU/ESG): Buy Scrap-based materials (Europe/USA) to comply with Carbon Regulations.
NPI is the King of the Present, but Carbon is the King of the Future.
Next: How Prices Change Monthly
👉 [STS #3] Alloy Surcharge: The Math Behind the Price⚖️ Disclaimer & Privacy Notice:
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